US steel coil prices regain upward momentum

30th April 2021

US coil prices continue their rapid ascent, after earlier indications that they were losing upward momentum. Domestic hot rolled coil prices now exceed US$1400 per short ton. Supply from the steel mills has improved slightly, with the latest capacity utilisation figure reported at 78.4 percent. Producers are catching up on order backlogs. However, buyers still struggle to replenish their inventories.

Spot availability of hot rolled coil is still poor. With mill shutdowns scheduled for the summer, this situation may worsen. Demand from the automotive sector continues to exert pressure on steel supply. Activity in the construction segment, including residential and commercial buildings, continues to increase.

The scenario is different for long products. Prices remained firm this month, with demand stable and inventories reported as adequate. Requirements for new warehousing continue to be strong. The market is eagerly awaiting the approval of the proposed US$2.3 trillion infrastructure package, which could instigate a considerable economic recovery.

Canadian factory output increases

The IHS Markit Canada Manufacturing PMI increased noticeably from 54.8 to 58.5, in March, reflecting good factory output volumes. Demand from both domestic and export markets were strong. Supply chains remained challenging with ongoing shortages of components and other input materials.

Replenishment of coil inventories continues in the automotive sector. Stable demand for long products is noted in the industrial segment. The recovery in the energy sector is being maintained. The short-term outlook for Canadian steel demand remains positive.

Mill delivery lead times are now extended into the third quarter. Although domestic steel producers have had a good influx of orders, the cancellation of the Keystone XL pipeline by the US administration has created concern.

The steel producing fraternity has been lobbying the Canadian government for the use of domestic steel products, instead of imports, for major public and private projects. This comes at a time when countries are concentrating their efforts on revitalising their own economies.

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